1. Determining your affordability
The amount of a mortgage which you can obtain depends on your income, family situation and term of a mortgage. The longer the mortgage term the more affordable the loan will be so therefore the more you might be able to borrow.
Important! Any current and unpaid credit commitments, such as loans, credit cards, car finance, will reduce your affordability.
2. Preparation of an initial decision – Decision in Principle (DIP) or Agreement in Principle (AIP)
In order to reserve a chosen property, most estate agents require preliminary consent of a lender which is obtained after initial verification of income and performing a credit check.
Five Star Mortgages Ltd does not charge any fees for obtaining a decision in principal.
Important! When property is reserved, an estate agent may also ask for the following documents:
– confirmation of a deposit, e.g. statement of an account on which savings are kept (proof of deposit),
– details of the solicitors who will handle your purchase.
If you do not have a solicitor providing legal service for your purchase (conveyancing), Five Star Mortgages Ltd can recommend one of our trusted law firms which we deal with on a regular basis. A good conveyancer will increase the chances of the transaction being carried out effectively and smoothly. After your offer is accepted by the seller, you will receive a letter from the estate agent confirming the reservation, this is known as “memorandum of sale”.
3. Completing a mortgage application
Having undertaken suitable research and fully analysing your personal situation, we will complete and submit a mortgage application to the lender that is the most suitable for you.
Important! Upon completing an application, you need to decide on a type of valuation you require. There are following types of valuation:
– Basic Valuation – Purely for the benefit of the lender and only confirms to you that your buying the property for a fair price.
– Homebuyer report – Provides you with a report on the condition of the property.
– Building survey – Provides a detailed report on the structure of the property.
4. Obtaining a formal mortgage offer.
Important! A mortgage offer is usually valid for up to 6 months. If the purchase has not been completed during this time, it would be at the lenders discretion whether they will renew the offer or not.
5. Building insurance.
Remember that your home must be insured because it is being used as security against the mortgage.
Five Star Mortgages Ltd offers a wide range of home insurance (building insurance and insurance of furnishings and fittings – contents insurance). A home insurance may also cover accidental damage and personal belongings, even if they are destroyed or stolen outside home.
Important! When buying a house it is worth considering additional insurance options: like life insurance, critical illness cover or income protection. Five Star Mortgages Ltd offers access to insurance companies from the whole of the market which allows us to recommend insurance policies tailored to your individual needs.
6. Exchange of contracts
A turning point in a transaction. Before you agree to an exchange of contracts, carefully read all documents provided to you by your solicitors and the seller.
Important! After exchange of contracts, and payment of a deposit, you are legally obliged to purchase the property.
Important! Building insurance, you become responsible for insuring the property from point of exchange of contracts.
After a transfer of the final payment by your solicitor, you become the legal owner of the property.
Important! The keys to the house are collected from an estate agent, but only after a call from solicitors confirming completion of the purchase.
Important! On the date of completion of the purchase you begin repayment of your mortgage.
8. Congratulations! Your dream home is yours!
Remember to change your address!
To avoid problems with undelivered mail, remember to set up mail redirection.
It will help you avoid problems with prompt repayment of bills which could affect your credit history in the future.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE